New data published by the Financial Conduct Authority (FCA) as part of its annual report has revealed that 0.3 per cent of borrowers has failed to make their mortgage payments within six months of taking out their loan. This figure compares to 0.25 per cent of households falling behind on their payments after six months this time last year. The small but significant number of mortgage borrowers fall into arrears almost immediately after taking out a loan, suggesting that the deal could have been unsuitable for their circumstances.
Three in every 1,000 new mortgage customers are unable to meet their monthly payments within six months of the loan being taken out. For some the problem is even more serious – one in every 600 loans falls into arrears by the point their second payment was due.
In 0.17 per cent of cases, shortfalls are occurring in the second month of taking on a mortgage. This failure to keep up payments in the short term “could be an indicator of an unsuitable or unaffordable product having been sold,” says the report.
“However we recognise that missed payments can be caused by macroeconomic changes like employment trends. As such, they will not always indicate unaffordable or unsuitable lending. We will continue to monitor the situation in case of sustained increase which would prompt more investigation.”
FCA chair Charles Randell said “We must act swiftly and decisively to tackle harm to consumers, particularly the most vulnerable. In the process, we have to make some difficult choices, learn from what works and what doesn’t – and be open about both.”